The Work

November 23, 2009 7:50 PM

Nortel Sells Another Business; Cleary, Latham on the Sale

Posted by Matt Straquadine

We're not sure if you've heard or not, but Toronto-based Nortel Networks Corp., once Canada's largest company, hasn’t been doing so hot lately. In fact, the company filed for bankruptcy protection last January, citing a slump in demand courtesy of the recession.

Since then Nortel has steadily been auctioning off assets. In July Ericsson AB beat out Nokia Siemens for Nortel’s wireless network business, paying $1.13 billion for the unit. (That sale closed last week, according to a Nortel announcement.) Then in September the company auctioned off its enterprise solutions business to Avaya, for $915 million.

And the latest winner in the everything-must-go Nortel auction process is Ciena Corp., a Maryland-based fiber optic network builder, which recently won an auction for Nortel’s optical networking unit, according to a Nortel release and news reports. Ciena is paying $769 million for the business, beating out a competing bid from Nokia Siemens Networks.

The purchase price is comprised of $530 million in cash and $239 million of convertible debt, according to Nortel's release. According to Bloomberg, Nokia Siemens had submitted a competing all-cash bid of $770 million but lost out because it wouldn’t say yes to the $21 million breakup fee that Ciena has agreed to--not insignificant considering that in the past some Canadian MPs have attempted to block Nortel's sales to international bidders.

Throughout its bankruptcy, Nortel has been represented by lawyers from Cleary Gottlieb Steen & Hamilton. Partners James Bromley and Lisa Schweitzer have been leading the way, and Schweitzer ran point on this particular sale. Other Cleary attorneys included corporate partners Daniel Sternberg and Craig Brod, along with corporate senior attorney David Parish. Reached for comment, Schweitzer declined to comment prior to the deal's close.

On the other side, handling the buy for Ciena were lawyers from Latham & Watkins, with M&A partner David Dantzic in the lead. Other Latham lawyers included tech transactions partner Kevin Boyle, tax partner Joseph Sullivan, bankruptcy partners Michael Bond, and Richard Levy, bankruptcy counsel Joseph Simei, finance partners Jackson Taylor, Frank Grell, and Herve Diogo Amengual, IP counsel Kieran Dickinson, benefits partner David Della Rocca, and securities partner Patrick Shannon. Dantzic couldn't be reached for comment in advance of this posting.

The deal is still contingent on the approval of U.S. and Canadian bankruptcy judges, who will hold a joint hearing December 2 to review the specifics. If it passes muster, Ciena expects the deal to close in the first quarter, according to a company release.

Finally, Bloomberg notes that a few major Nortel units still await auction--including its GSM business, the ubiquitous network that nearly all mobile phones connect through. Nortel has just announced that it will hold an auction for that unit tomorrow.

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